USDA Backs EPA’s Renewable Volume Obligations, Protects Biofuel Demand for Corn and Soybean Farmers
The U.S. Department of Agriculture (USDA) is throwing its support behind the Environmental Protection Agency’s (EPA) newly proposed Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS)—a move seen as critical for the future of biofuels and commodity demand for corn and soybean farmers.
“We at USDA are very supportive of the Environmental Protection Agency and the proposed Renewable Volume Obligations. We think those numbers are wonderful and are where they need to be and meet the current ability of America to produce biofuels,” said USDA Deputy Secretary Stephen Faden.
The Renewable Volume Obligation sets the minimum amount of biofuels—such as ethanol and biodiesel—that must be produced and blended into the national fuel supply each year. These obligations are updated annually by the EPA.
“The Renewable Volume Obligation, that’s the amount of biofuels we need to produce at minimum and be blended into our fuels in this country every year. EPA sets that on an annual basis.”
However, a legal provision allows small oil refineries to apply for waivers that exempt them from blending requirements—something that in the past has led to a loss in total biofuel volume, which directly impacts demand for corn and soybeans used to produce these fuels.
“There’s a provision in the law which says for certain small oil refineries, they are entitled to receive a waiver from having to participate in this program. They don’t have to blend biofuels into the petroleum that they refine.”
“In the past, that has essentially been lost volume. If you had a Renewable Fuels Obligation of a billion gallons and 100 million of it were waived because of the small refinery, in reality, you’d only be producing 900 million gallons.”
But the EPA is changing that process to protect total biofuel demand.
“Now what EPA is talking about doing is, these small refineries, they won’t have to blend the 100 million in my example, but we’re going to redistribute the obligation to blend to larger refineries which do not get a waiver, instead of losing the 100 million gallons in sales for biofuels that go straight to corn and soybean farmers.”
Audio Reporting by Dale Sandlin for Southeast AgNet.